The Professor was one of the earliest to get bullish on the commodities sector. Since he first started to look at commodities, stocks like RIO exploded. You can read about that HERE.

The Professor has now turned BEARISH on this particular Commodities sector. He has Identified 2 new Commodities trading vehicles, which have set up nicely and he thinks are primed for a breakdown.

Fundamentals

Due to rising interest rates, mortgage repayments are higher than they have been for a long time. This could cool the housing market, and house prices could fall. You can read more about this HERE. The commodities sector that could suffer the most from these changing fundamentals is the Home Builders. 

The Professor has Identified 2 Plays that could break down shortly:

LEN

Lennar Corporation, together with its subsidiaries, operates as a homebuilder primarily under the Lennar brand in the United States. 

The company’s homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development, and sale of residential land; and the development, construction, and management of multifamily rental properties. 

The Professor Sent out This Trade Idea to subscribers on April 5: Here are his thoughts:

LEN 1 hour

Trade Setup:

• Descending Triangle: The bearish triangle is showing that the bulls are losing control at this time. If the bulls cannot defend the lower support, I’m expecting prices to continue to the downside
• TTM Squeeze: 1 hour and 2-day squeezes are showing up and this is showing me when the bulls and bears can’t figure out who is in control. I like to know when this shows up because it means the breakout is imminent.
• On Balance Volume: OBV is bearish and breaking under the lows made earlier in the chart. If this continues, the underlying momentum is bearish and lower prices are expected.

Trade Details:

• Target $78.87
• Target $76.88
• Target $74.68
• 20 MAY 80 Put 

Key Take Away: Interest Rates affect mortgage repayments. The market is based on supply and demand. When repayments increase, the should be less demand for expensive properties all else being equal. This could have ripple effects across the Home Building Industry. 

XHB

XHB is the SPDR S&P Homebuilders ETF. It consists of stocks such as Floor & Decor Holdings Inc (FND), Lennar Corp (LEN), The Home Depot Inc (HD), and Lowe’s Companies Inc (LOW) along with others. Due to rising interest rates, the Homebuilder related stocks could suffer, and XHB consists of a basket of such stocks.

The Professor Sent out This Trade Idea to subscribers on April 5: Here are his thoughts:

XHB Daily 

Trade Setup: 

• Descending Triangle: The bearish triangle is starting to show the bears are in control and the bulls just can’t seem to get any momentum going. If the bears continue to press lower, the lower support is likely to break down
• Fib Extensions: The fib extensions are a great tool to find targets in either the upside or downside of a breakout. It gives traders an idea of where to exit once the breakout occurs.
• TTM Squeeze: The TTM Squeeze is showing red dots and the momentum is unable to get a positive trend started. I’ll look for the momentum to fall back below zero and show negative values/
• On Balance Volume: OBV is bearish and showing the lowest value in the chart. At this time I want to see the trend continue lower to support the bears are in control.

Trade Details:

• Entry Below $63
• Target $62.14
• Target $60.93
• Target $59.58
• 14 APR 64 Put